I am a senior editor at Forbes, covering legal affairs, corporate finance, macroeconomics and the occasional sailing story. I was the Southwest Bureau manager for Forbes in Houston from 1999 to 2003, when I returned home to Connecticut for a Knight fellowship at Yale Law School. Before that I worked for Bloomberg Business News in Houston and the late, great Dallas Times Herald and Houston Post. While I am a Chartered Financial Analyst and have a year of law school under my belt, most of what I know about financial journalism, I learned in Texas.

Inside The Koch Empire: How The Brothers Plan To Reshape America

"We get threats from people in Congress, and this is pushed out and becomes part of the culture: That we are evil so we need to be destroyed." - Charles Koch (Photo: Jamie Kripke for Forbes)

A man who, by FORBES’ careful measure, is one of the 50 most powerful people in the world, one of the 20 wealthiest–and one of the dozen most vilified–is perpetually in a position to reflect. But given it’s Charles Koch’s 77th birthday, the calendar demands it. Especially with the presidential election that Charles has called “the mother of all wars” less than a week away, and with Koch Industries, the firm he has built into the second-largest private company in America, considering several more big acquisitions, including an 18,000-employee automotive glassmaker, Guardian Industries.

Yet despite all these momentous events swirling around his wood-paneled Wichita office, decorated with seascapes and looking out on to the prairie to the north, the legacy he wishes to initially address comes via a piece of paper with a color photograph of his first grandson. The baby’s name: Charles. “My proudest accomplishment,” he smiles.

Given that he and his brother have been called “pigs” (by MSNBC host Chris Matthews) and protesters have unfurled “Koch Kills” banners at rallies, Charles clearly wants to use this rare interview to humanize himself, attaching some personal substance to his courtly Midwest manner. Yet this grandfatherly presence, framed by an unbuttoned collared shirt and a toothy grin, is at odds with the business and political juggernaut that he and his younger brother David have built in a systematic process befitting their MIT training.

Charles’ many critics on the left–including the President of the United States–accuse him of accumulating too much power and using it to promote his own economic interests through a network of secretive organizations they call the “Kochtopus.” Ironically, the Koch brothers believe they’re fighting against power, at least in the political realm. For the Kochs the real power is central government, which can tax entire industries into oblivion, force a citizen to buy health insurance and bring mighty corporations like Koch Industries to heel.

“Most power is power to coerce somebody,” says Charles, in a voice that sounds like Jimmy Stewart with a Kansas twang. “We don’t have the power to coerce anybody.”

The November elections–which David, in a separate interview shortly after the results were finalized, termed “bitterly disappointing”–seem to confirm Charles’ last point. Not even the Koch brothers, who spent tens of millions of dollars during this election cycle (they won’t disclose the exact amount) funding direct political contributions and issue-driven “nonprofits,” could coerce voters to back their candidates. Mitt Romney’s loss was a huge blow to them, both in terms of likely policy outcomes and personal reputation.

But those who think the brothers, older and chastened, will now fade away don’t understand the Kochs. Not a bit. Obama’s victory was just a blip on a master plan measured in decades, not election cycles. “We raised a lot of money and mobilized an awful lot of people, and we lost, plain and simple,” says David. “We’re going to study what worked, what didn’t work, and improve our efforts in the future. We’re not going to roll over and play dead.”

The goal has always been, Charles says, “true democracy,” where people “can run their own lives and choose what they want to buy, choose how to spend their money.” (“Now in our democracy you elect somebody every two to four years and they tell you how to run your life,” he says.) Both Kochs innately understand that–unlike the populist appeal of their fellow midwestern billionaire Warren Buffett and his tax-the-rich advocacy–their message of pure, raw capitalism is a much tougher sell, even among capitalists.

So their revolution has been an evolution, with roots going back half a century to Koch’s first contributions to libertarian causes and Republican candidates. In the mid-1970s their business of changing minds got more formal when Charles cofounded what became the Cato Institute, the first major libertarian think tank. Based in Washington, it has 120 employees devoted to promoting property rights, educational choice and economic freedom. In 1978 the brothers helped found–and still fund–George Mason University’s Mercatus Center, the go-to academy for deregulation; they have funded the Federalist Society, which shapes conservative judicial thinking; the pro-market Heritage Foundation; a California-based center skeptical of human-driven climate change; and many other institutions.

All of these organizations, unknown to 99% of the population, and their common source of support, unknown to most of the rest, have provided the grist for conservative thinking since Reagan. It’s a measure of Koch’s success that 40 years after Richard Nixon was stumping for national health insurance, Paul Ryan’s Ayn Rand-tinged economics are just a little right of center. That the Supreme Court’s conservative majority led by Chief Justice John Roberts has issued a number of pro-property rights, anti-government decisions in recent years that read like they came straight out of a Federalist Society position paper. That when George W. Bush sought a watchdog on regulation costs, he appointed a top Mercatus executive. And none of this was accidental–it just took millions of dollars over decades of time. You can see the same process at work in David’s quest to find a cure for cancer. A prostate cancer survivor like the rest of his brothers, he has given $215 million to fight the disease so far, including $100 million to fund his own research center at MIT.

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A company owned by the GOP mega-donor Koch brothers is encouraging its employees to vote for Mitt Romney and other chosen candidates in November — warning that they will “suffer the consequences,” like higher gas prices, if they vote the wrong way.

The left-leaning magazine In These Times obtained the mailing, which was sent to all 45,000 employees of Koch Industries’ Georgia-Pacific subsidiary earlier this month.

Koch Industries is run by the billionaire siblings David and Charles Koch, who have donated multi-millions to Republican candidates and conservative causes.

David Koch hosted a high-priced fundraiser for Romney this summer at his $18 million Southampton beachfront home.

“If we elect candidates who want to spend hundreds of billions in borrowed money on costly new subsidies for a few favored cronies, put unprecedented regulatory burdens on businesses, prevent or delay important new construction projects, and excessively hinder free trade,” read a cover letter signed by Koch Industries President Dave Robertson, “then many of our more than 50,000 U.S. employees and contractors may suffer the consequences, including higher gasoline prices, runaway inflation and other ills.”

The letter was careful to note that the employees’ political decisions are “yours and yours alone.”

John Chiasson/Getty Images Charles Koch penned an op-ed criticizing President Obama that was included in the mailing sent to all 45,000 employees of Koch Industries’ Georgia-Pacific subsidiary.

The packet included a flyer with a list of candidates supported by Koch companies or its political action committee KOCHPAC. Mitt Romney tops the list.

It also included an op-ed by Charles Koch slamming President Obama and one by David Koch praising Romney.

In a statement sent to MSNBC, Koch Companies executive Rob Tappan said that the letter was sent “to encourage employees to be informed about and engaged in the political process.”

He noted that other companies and groups like labor unions send similar mailings to their employees.

In fact, a flashy Florida billionaire dubbed the “King of Versailles” warned all 7,000 of his employees that they should fear for their jobs if Obama is re-elected.

“In spite of all of the challenges we have faced, the good news is this: The economy doesn’t currently pose a threat to your job,” David Siegel wrote in the email, which was leaked by his staff at Westgate Resorts. “ What does threaten your job however, is another 4 years of the same Presidential administration.”

He went on to argue that if Obama is re-elected and raises taxes on the wealthy, the 77-year-old will be forced to cut jobs and will have no motivation to continue working himself.

Siegel defended the email in a phone call to the Daily News last week, saying he was just trying to “educate” his employees.

“I’m not in that voting booth with them,” he said. “I’m not trying to intimidate anybody.”

Koch brothers to workers: Vote for Romney or ‘suffer the consequences’

As a contentious election season enters its final weeks, a flurry of communication from corporate leaders to rank-and-file workers strongly implies that voting for Obama could imperil their jobs and their financial stability.

Employees of a paper company owned by the outspoken billionaire Koch brothers received a mailing warning that they could “suffer the consequences, including higher gasoline prices, runaway inflation, and other ills” if they voted for candidates not supported by Koch-owned companies or its political fund-raising arm.

The company also provided workers with a list of those candidates it supports. At the top: Mitt Romney, according to media outlet In These Times, which broke the story. “The packet also included an anti-Obama editorial by Charles Koch and a pro-Romney editorial by David Koch,” it said.

“This is in no way an attempt to ‘intimidate’ employees,” Greg Guest, senior director of corporate communications at Georgia-Pacific, said in a statement on the site kochfacts.com.

Although the Koch brothers are known for their outspoken support of the GOP, “Our support is not based on party affiliation, and we support both Republicans and Democrats who support market-based policies and solutions,” Guest’s statement said.

“In the flyer sent to Oregon employees, all 14 Koch-backed state candidates were Republicans,” In These Times reported. A request for examples of Democratic candidates included on the list of Koch-supported candidates was not answered by press time.

Thanks for this insight into what creates a successful business. It’s interesting to compare these employee policies and long-term thinking with what Ross Perot wrote about when GM fired him. Maybe GM just got old and set in its ways, refusing to see where they could be more efficient. Time will tell if Koch Industries continue to prosper after Charles and David are gone.

In the meantime, everyone benefits from the think tanks these men have created. They provide ideas to stem the tide of statism. It’s interesting that their inspiration is from their father who saw first hand what statism leads to. As Washington now emulates the USSR in controlling everything, Americans need all the help they can get to understand the reasons central planning by politicians has never worked in the long run.

I have a question concerning your statement: There was one unexpected by-product of the schism: Koch Industries expanded its Washington presence in the early 1990s partly to deal with Bill’s troublemaking, and …..” What type of troublemaking?

Among other things, he set up a corporation specifically to file environmental litigation against his brother. One might disagree about the word “troublemaking,” but it doesn’t appear entirely driven by altruism.

So, the troublemaking you refer to has to do with his brother — you are not saying that his “troublemaking” is against any law of the US which would incur legal penalties or cause Joe Q. Public to have a problem (vandalism, dumping of pollutants destruction of public or private property, etc.) Do I have it correct? Thanks, JB

I remember reading the pamphlets coming out of the Koch’s Cato Institute in the 1980s about getting rid of Social Security and replacing it with a self-invested system and thinking “That’s crazy! Who would ever advocate for that?” Now what seemed to be fringe ideas in the 1980s are much more mainstream today, as the article points out.

It would have been interesting for Forbes to have explored the history of political connections between the Kochs and Ron Paul.